Uruguay: Botnia Terminal Opens

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Botnia's paper mill is set to open soon, following further tests and the opening of a new terminal.

BY CHRONICLE STAFF

Finland-based pulp producer Botnia, the largest foreign investor in Uruguay, is one step closer to starting its $1.2 billion mill in the South American country. Last week, it inaugurated a new $23.7 million terminal at the Port of Nueva Palmira aimed at shipping pulp to Europe and Asia.

Thanks to the new pulp mill, Botnia will be able to boost its production by one million tons and provide a full range of pulp, says Marko Janhunen, a vice president at the Finnish company. "Full production [in Uruguay] will mean an important increase in our annual production capacity which currently is 2.7 million tons," he says. "We will also be the only player in the market that can provide our customers with the whole scale of pulp products from Northern long-fiber pulp to Southern hemisphere short-fiber pulp."

Next year, Botnia will be the only company in the world that can offer its customers a wide portfolio of products made of both Northern long fiber and eucalyptus raw material, he adds. Spain-based Ence and Swedish-Finnish Stora Enso are also building pulp mills in Uruguay.

ILLEGAL BLOCKADES

The opening comes as Argentine protesters continue their blockades despite a ruling last year from a Mercosur tribunal that they are illegal. Uruguay's foreign minister Reinaldo Gargano has alerted members of the Mercosur parliament that while Uruguay holds the pro-tempore presidency of the regional bloc, the South American country will seek the reform of Mercosur’s dispute resolution mechanism.

"In spite of this ruling, Uruguay has received no compensation and the blockades continue as the project progresses," U.S.-based consultancy Global Insight said in a commentary today. "Gargano's recommendation is valid. Little benefit can be obtained from an institution that is effective in theory, but yields no practical benefits as its ruling cannot be enforced."

The new terminal is located at the Port of Nueva Palmira and will be operated by Ontur, a company that is 40 percent owned by Botnia. The other owners are Uruguay-based Ontemar (18 percent), Sweden-based NYK Lauritzen Cool (14 percent), Uruguay-based Christophersen S.A. (14 percent) and Sweden-based Swed Fund International (14 percent). The port of Nueva Palmira is the second-largest port in Uruguay after Montevideo and is also used for exports of fruit and other products.

Norwegian/Japanese-owned Gearbulk is the only shipping line so far that will be using the new terminal, which started construction in March last year.

EUROPE AND CHINA

Most of the pulp from Botnia - around 70 percent - will be shipped to Europe, while the rest will go to China, according to Janhunen. "In Europe the pulp will be sold to several countries," he says.

The pulp from the mill in Fray Bentos, which only has storage capacity for one day's production, will be sent with barges 70 kilometers downstream to the new terminal. The port has 20,000 m3 covered warehouse space, able to store 100,000 tons of pulp, according to Botnia.

The pulp mill itself is set to open sometime this month. "It depends on successfully finalizing the testing period which is under way at the moment," Janhunen says. "Starting a pulp mill is a process that takes a couple of days."

The mill currently employs some 4,700 people. Botnia's source is its Uruguayan subsidiary Forestal Oriental S.A., which owns around 160,000 hectares of land, 60 per cent of which is under cultivation or is suitable for cultivation.

ACCIDENT

The Argentine protesters - with support from the Argentine government - are claiming that the new mill is unsafe. Their latest example is an accident that happened at the mill last month. Two workers were harmed when heavy winds blew sodium sulphide (see Botnia's Statement on the Accident).

"We have continuously highlighted the importance of safety at the site," Janhunen says. "We have undertaken numerous campaigns in order to make sure that safety measures and regulations are in place and implemented. All workers who do not comply with safety regulations will be sanctioned. We have a big team of safety supervisors whose only responsibility is to supervise that safety measures are being followed."

Botnia's safety statistics in Fray Bentos shows that its track record - accidents per million working hours - can be compared with any construction project in Europe, he adds.

ARGENTINA'S PROTESTS

Shortly before the new terminal at Nueva Palmira opened, Argentina's foreign ministry issued a statement expressing its "high anxiety and discouragement" over the news about the opening of the terminal, claiming it will "transport substances and materials linked to the illegal Orion business operated by Botnia."

It is unclear why the Argentine Foreign Ministry refers to the Botnia mill as "illegal" despite its legal status in Uruguay. The mill has also been declared environmentally safe by the World Bank, international experts and Uruguayan authorities. However, Argentina's President Nestor Kirchner insists the mill will damage the environment.

Uruguay has lost millions of dollars in lost tourism and trade as a result of the continued blockades from Argentine protesters. Although the Argentine government claims it has not supported the blockades, neither has it stopped them.

Dr. Wayne Dwernychuk, a widely-respected contamination expert who advised the World Bank's IFC on the Botnia mill, says there is a link between the Kirchner government and the protesters. The proof is the recent offer by Argentina's government for a truce in the conflict with Uruguay. In talks in New York recently, Argentine officials said they would lift the pickets in return for a postponement of the opening of the mill.

"By their recent position of offering this truce, it is evident the government of Argentina encourages and is complicit in these road blocks," Dwernychuk argues. "How could they offer a truce without having the power to halt them? Once again, double talk from a hypocritical regime. If the Argentine position was not so filled with untruths and misinformation, the whole affair would be of high comedic value. Unfortunately, their position does little to offer support to their own citizens who are faced with continuing environmental problems with little recourse."

Jorge Balseiro Savio, director of the Uruguay-based Science and Research Institute (ICI), supports Dwernychuk and also blasts Argentina's position on the Botnia mill. "It is hard to accept [Argentina's] concept based on lies, hypocrisy, ignorance of local - real local - community beliefs, and the use of brute force from a big country to a small neighbor through the blockade that we have been suffering for more than two years," he says. "We Uruguayans know that truth is with us and justice will prevail."

An overwhelming majority - 80 percent - of Uruguayans support the new Botnia mill, according to polls in both December and June last year by Interconsult and El Observador, respectively.